If you play a lot of games like ESF (3-D/Combat/First Person Shooters/etc) you should definitely go for the surround sound system. It's much easier to tell when someone is behind you and about how far behind you they are with surround sound. It also helps to get you really involved in those that have heavy large-scale combat like the upcoming Halo or Half Life 2. Headphones are great in that not everybody has to hear what's going on even when you have the headsets maxed out (which you should never, EVER do), and that gives you the freedom to play whatever you want as loud as you want without worrying about parents or friends or whatever complaining.